European Dairy Market Summary

MADISON - Jan 19/06 - SNS -- Dairy market conditions in western and eastern Europe were reviewed in the latest report on the sector released by the USDA today.

WESTERN AND EASTERN EUROPE

WESTERN OVERVIEW:  Milk production continues to increase across most
areas of Europe, although at varying rates.  Deliveries to factories
are reflecting the increases.  Milk volumes are increasing, but some
reports indicate that overall volumes are trailing last season for
this time of the year.  Milk handlers state that more milk producers
than in years past will need to closely monitor their milk marketings
as the quota yearend nears.  On January 12, the Dairy Management
Committee met and increased the export refund for butter by 1 Euro.
This was the first increase in an export refund in quite some time.
Traders and handlers have mixed opinions on why this move occurred.
Intervention for butter will be opening on March 1 and many feel that
butter clearances will be active.  Some feel that the Committees move
was to help encourage international sales versus intervention
clearance.  Skim milk intervention also opens March 1, but traders and
handlers do not foresee significant activity early on in the open
season.  International buyer interest remains slow for most all
manufactured dairy products.  Some traders are indicating that a full
cream milk powder tender may be extended in the near future which
could stimulate buyer interest.  Outside of this potential, most
European sales activity continues to center around an internal market.


EASTERN OVERVIEW:  Milk production trends in Eastern Europe continue
to hold steady at seasonally low levels, but a few more reports of
slight increases are being released, especially from Polish producers.
Milk handlers state that more Eastern European producers may have to
closely monitor their marketings versus previous years as the milk
quota yearend nears.  Most of these producers have not had to deal
with quota limits up to this point, but as they increase their milking
herds and become more efficient, additional milk volumes become more a
concern.

0930c steve Schneeberger  (608)224-5084

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STAT News Service